The financial news media, previously optimistic, are now blatantly pessimistic. Past assurances about inflation control and a "soft landing" for the economy have been replaced by stark warnings. Stock markets are faltering, fears of a recession loom, and the U.S. economy shows signs of strain. Today's narrative starkly contrasts past predictions, casting doubt on the media's credibility.
Amid persistent high inflation and interest rates, 60% of U.S. adults live paycheck to paycheck. With the consumer price index up 3.7% from last year, stagnant wages strain households. The Federal Reserve's 11 rate hikes haven't stemmed inflation, severely impacting lower-income individuals. Essential costs continue to rise, and 70% of Americans report financial stress, with less than half having an emergency fund.
The S&P 500 Equal Weight index has plummeted, erasing gains and revealing a bleak broader market concealed by the performance of tech giants like Nvidia, Tesla, and Apple in the standard S&P 500. Dominance of these few stocks heightens market vulnerabilities. As the Federal Reserve scales back with a record QT nearing $1 trillion and prolonged higher rates, the markets are strained. QE once boosted markets, but QT is now eroding them.
JPMorgan strategist, Marko Kolanovic, warns of looming downturns as the S&P 500 nears his 4,200 target, drawing parallels to the 2008 crisis. He cites challenges like overvalued markets, tech stock gains concentration, and tighter financial conditions, including rising interest rates. With increasing delinquencies in credit and loans, Kolanovic urges caution, noting that current market chatter mirrors pre-2007 crisis.
Pending home sales in August plummeted 7.1% MoM, drastically worse than the forecasted 1% drop, marking the sharpest decline since September 2022. This downturn mirrors the record lows during the COVID lockdown. Every region faced setbacks, with some regions hitting their weakest since 2001. Experts warn of a bleak outlook with rising mortgage rates, raising concerns about the housing market's prolonged instability.